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On June 13, 2018, Senator Orrin Hatch (R-UT) introduced to the Senate Judiciary Committee an amendment to restore the careful balance sought in the Hatch-Waxman Act, which provided incentives for both pharmaceutical innovation and drug affordability. The amendment, titled the Hatch-Waxman Integrity Act of 2018, would modify the IPR process for pharmaceuticals—under Hatch-Waxman and the BPCIA—and would amend sections of the Federal Food, Drug and Cosmetic Act that provide abbreviated pathways for generic drug and biosimilar product approval. According to Senator Hatch, the “amendment will ensure that Hatch-Waxman continues to operate as originally intended by protecting the ability of generic drug companies to develop low cost drugs while at the same time ensuring brand-name companies have sufficient protections in place to recoup their investments.” The proposed amendment will likely eliminate, however, IPR challenges by generic manufacturers wishing to challenge a brand-name drug patent, as well as IPR challenges by biosimilar makers wishing to challenge a biologic patent.

Many believe that the passage in 2012 of the AIA, creating IPR proceedings, skewed the balance between brand-name drugs/biologics and generics/biosimilars. For example, in his office’s summary of the amendment, Senator Hatch stated that “with the enactment of the IPR and PGR processes, generic drug and biosimilar manufactures have increasingly used the IPR process to circumvent the Hatch-Waxman Act and BPCIA patent challenge processes while nonetheless taking advantage of their abbreviated processes for drug entry.” Senator Hatch, Chairman of the Senate Republican High-Tech Task Force and co-author of the Hatch-Waxman Act, noted that “hedge funds with no interest in manufacturing or marketing drugs have filed IPR challenges against drug patents with the goal of profiting from stock market declines triggered by the IPR filings—a type of market manipulation.”

The proposed amendment would require generic manufacturers and biosimilar makers wishing to challenge a pharmaceutical patent to choose between Hatch-Waxman/BPCIA litigation or an AIA challenge (IPR). Presently, generic ANDA filers and biosimilar applicants may pursue challenges under both methods. A challenge under Hatch-Waxman litigation provides certain advantages such as being able to rely on the drug innovator’s safety and efficacy studies for FDA approval. In contrast, an IPR challenge does not provide the advantages of an abbreviated pathway for generic product approval, but is cheaper and faster than Hatch-Waxman and BPCIA litigation.

The proposed amendment would impose significant limitations on IPR proceedings. According to Senator Hatch, the amendment “would preserve Hatch-Waxman as the standard path for generic companies to challenge brand patents, while keeping IPR as an option in situations where other interests come into play.” That said, the amendment would not have any impact on the use of IPR by the tech industry. Senator Hatch has recognized that IPRs are of particular importance to the tech community, but are “producing unintended consequences in the Hatch-Waxman context” by “enabling two separate paths to attack a brand patent.”

In addition to requiring generics and biosimilars to choose between Hatch-Waxman/BPCIA litigation and IPR proceedings, the proposed amendment would prohibit using IPR outcomes as a basis for a Paragraph IV certification that a patent is invalid. The amendment would also require ANDA applicants to certify that they will not, and have not, filed an IPR petition against Orange Book listed patents for the related drug. A parallel provision is proposed for biosimilar applicants under the BPCIA. However, there is no FDA listing for biologics that is comparable to the Orange Book, so it would be difficult for a biosimilar applicant to identify the necessary patents for the proposed certification. Currently, a biosimilar applicant is not required to disclose any patents when submitting its application. Thus, biosimilars would endure additional work and costs in preparing an application.

All things considered, the Hatch-Waxman Integrity Act of 2018 would prevent a generic manufacturer and a biosimilar maker from challenging a pharmaceutical patent in both Hatch-Waxman/BPCIA litigation and an IPR proceeding, thereby forcing these manufacturers to “choose” between the two venues. However, as previously stated, an IPR challenge does not provide the advantages of being able to rely on the drug innovator’s safety and efficacy studies for FDA approval. Manufacturers choosing to challenge a brand-name drug patent in an IPR proceeding therefore would have to develop their own safety and efficacy studies, which is both costly and timely. This effectively negates the advantages of an IPR proceeding (cheaper and faster), and will likely dissuade a generic manufacturer from challenging a brand-name drug patent in IPR proceedings. Thus, the proposed amendment arguably forces these manufacturers to pursue challenges in Hatch-Waxman litigation.